European Central Bank maintains key interest rate at 0.75%

10 January 2013 12:45[Source: ICIS news]

LONDON (ICIS)--The European Central Bank (ECB) on Thursday held its key interest rate unchanged at 0.75% as it monitors the impact of its bond-buying scheme announcement and the state of the eurozone recovery in the new year.

This is the sixth consecutive month that interest rates have been held at current levels.

The ECB announced its bond-buying programme in September last year, where it would purchase short-term eurozone government debt on the secondary market, reducing interest on treasuries.

No countries have signed up to the programme so far, but its announcement helped to lower interest rates on bonds issued by Spain and Italy, which had been creeping towards 7%, the level at which government borrowing is seen to be unsustainable.

There are also signs that the outlook for the eurozone may be stabilising. In an economic outlook published earlier this week, Sweden-headquartered bank Nordea said that market sentiment on the eurozone was likely to improve in the near future on the back of expectations of stronger performance.

“The impulse to market sentiment coming from the euro area is likely to be mainly positive in the near term with key figures likely to improve and [ECB head Mario] Draghi staying firmly in the dovish corner,” the bank said.

The news follows the Bank of England’s announcement earlier on Thursday that it has held its interest rates at 0.5%, and decided against issuing further quantitative easing this month.